Indian Prime Minister Narendra Modi promised a war on the “tax terrorism” practiced under the previous government. After a year in power, some investors are wondering if Mr. Modi has acquired a case of Stockholm Syndrome. That’s because the Prime Minister appears to have grown sympathetic to India’s notoriously capricious tax collectors.
Foreign portfolio investors were doing well with Mr. Modi in power. They bet his landslide victory last May heralded faster economic growth. The managers of mutual funds and other institutional investors rushed to India’s stock exchanges. The gamble paid handsomely, as the value of Indian equities soared by 30 per cent in 2014.
Then the taxman showed up.
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